News Roundup Thursday 1st August 2019

NEWS ROUNDUP

TAX NEWS

Johnson’s “Boosterism” a winning formula

A senior City source has told the Mail that Boris Johnson has described his economic philosophy as “Boosterism” – a vision that observers say equates to a Blairite enthusiasm for infrastructure spending coupled with a Thatcherite belief in the power of tax cuts to stimulate the economy. The paper cites plans already outlined by Johnson for infrastructure spending and adds that he is also considering a £100bn plan put forward by Sajid Javid for investment to help bridge the North/South divide. The PM has also commissioned work on plans to raise the starting threshold for paying National Insurance to £12,500, at a cost of £11bn a year. This comes after a pledge to raise the starting threshold for paying 40p tax from £50,000 to £80,000 and a review on stamp duty, which could see the tax being scrapped for properties worth less than £500,000. Tory MP Robert Halfon said the PM’s plans we re a “winning formula”.

Daily Mail, Page: 16

Self-employed at risk of underpaying tax due to HMRC glitch

An HMRC glitch could mean self-employed people are at risk of underpaying their tax bill on 31st July, according to Moore Stephens. HMRC may have incorrectly reduced the amount or may not have issued taxpayers with a reminder at all, meaning self-employed taxpayers will have to pick up the bill in January 2020. Partner Lucienne Parry said: “In some cases, we have seen individuals being wrongly sent automatic refunds from HMRC, which will need to be repaid. Those impacted are going to think it very unfair that an HMRC error could lead to interest charges and in some cases potential surcharges.” A similar glitch occurred in January 2019 but then HMRC assured taxpayers that they would not be charged additional interest.

Accountancy Age

Farmer wins £1m VAT appeal in Supreme Court

Aberdeenshire farmer Frank Smart has won a battle with HMRC over VAT payments on units of farmland he bought from the Scottish government. Judges ruled that Mr Smart should not have paid VAT on a £7.7m purchase of more than 34,000 units of “single farm payment entitlement” subsidies because he bought the units in support of “current and planned” economic activities. Glyn Edwards, VAT director at MHA MacIntyre Hudson and a legal adviser to Mr Smart’s team, he said: “If HMRC had won instead, every business in receipt of subsidy could have been subject to a restricted right of VAT recovery.”

The Scotsman, Page: 8 The Press and Journal, Page: 4

Duncan Smith calls for loan charge rethink

Iain Duncan Smith has urged the Prime Minister and the new Chancellor Sajid Javid to urgently review the loan charge arguing that the retrospective tax is forcing businesses to close and making individuals bankrupt and risking homelessness. The charge was introduced in response to the Treasury’s concerns about “disguised remuneration schemes” which involved individuals being paid through loans, usually via an offshore trust in a low or no tax jurisdiction, which they did not have to repay.

Yorkshire Post, Business, Page: 1

The taxman’s digital dream

The FT’s Chris Giles asks whether Russia’s AI-driven real-time centralised VAT system, which has reduced the tax gap from 20% to 1%, is the right answer or too much like Big Brother.

Financial Times, Page: 9

SMEs NEWS

R&D tax credits could lessen pain for SMEs preparing for Brexit

Allie Renison, head of European and trade policy at the Institute of Directors (IoD), considers the complexities facing businesses preparing for Brexit. She says at least a third of IoD members say they can adjust only after they know what no-deal looks like and that although there is no silver bullet the Government could do two things to help. Firstly, a voucher scheme would help SMEs access approved legal, tax and professional services and offset the cost of compliance and planning advice. Secondly, the Chancellor could make Brexit planning tax deductible by expanding the scope of R&D tax credits to cover certain preparations, or by creating a new type of tax credit.

The Daily Telegraph, Business, Page: 28

PROPERTY NEWS

UK mortgage approvals rise

The number of mortgage approvals hit 66,400 in June, up from 65,650 in May, according to the Bank of England’s latest data, above economists’ expectations and the highest number since January. Howard Archer, an economist at the EY Item Club, said the reprieve from a disruptive Brexit in March, together with better consumer purchasing power and strong jobs growth, had helped, although the “overall benefit has been relatively limited”. However, annual lending growth to UK consumers slowed to 5.5% in June, from 5.7% in May, the slowest rate since April 2014.

Financial Times, Page: 2 The Times, Page: 40 City AM

CORPORATE NEWS

David Maclean heading to Revolut

Metro Bank finance director David Maclean is heading to fintech group Revolut – after a stormy few months at the bank following its accountancy scandal.

Financial Times, Page: 17 The Times, Page: 40 The Daily Telegraph, Business, Page: 26 Daily Mail, Page: 67

ECONOMY NEWS

Threat of no-deal sends pound to 28-month low

A hardening of rhetoric from the Boris Johnson government over Brexit pushed the pound to a 28-month low against the dollar on Monday. Sterling dipped 1.1% to $1.2242 and €1.1004, with analysts at ING Group now assuming an early election will take place and that the pound will sink as low as $1.18 and €1.05.

BBC News Financial Times, Page: 1 The Daily Telegraph The Times, Page: 1 The Guardian, Page: 1, 28

OTHER NEWS

Brussels shortlists three for top IMF post

Brussels has excluded Mark Carney and George Osborne from its shortlist of candidates to replace Christine Lagarde at the IMF. There are three contenders remaining: Jeroen Dijsselbloem, former Dutch finance minister, Kristalina Georgieva, Bulgarian chief executive of the World Bank, and Olli Rehn, Finland’s central bank chief.

Financial Times, Page: 4 The Times, Page: 36

Contact Paul Southward.

Paul Southward